"Companies" in the general sense definitely do employ European developers. I've worked several places that used remote developers from Ukraine, Poland, etc. And in my experience, Ukrainian developers are generally very good.

But for startups in particular (which I assume is what you really mean, since you mention VC), I think there's more reluctance to employ that kind of contract help, especially in the very early stages. The thinking seems to be that you want the people building the early version of the product to be all FTE's, probably with some equity, sharing the same vision of what the company is trying to do, physically co-located, etc. Now I'm not saying that it's actually the case that those factors are important for startups... just that a lot of people seem to think that they are.

Me personally? When we get to the point of needing additional help, and assuming money is available for paying help, I'll almost certainly be looking to some of the Ukrainian firms I've worked with in the past. But that's just me. shrug

I'm a contractor in Germany and have worked for US clients a few times as well as clients in Europe. I also worked at a software agency here years ago that regularly took projects from the US, the same company also had remote devs in Poland and other places. I'd say it's pretty common.

Language barrier primarily, decent English is not sufficient for communicating complex ideas. Time zone inconvenience and quality control are also major issues.

This is just anecdotal, of course, but I've found that developers from Eastern European countries tend to speak English that is more than good enough even for complex ideas. Accent can be a slight issue at times, but not fundamental language understanding.

Time zone is definitely an issue though. Especially if you starting using multiple teams in many different time zones. It's one thing if you have Team A in, say, San Jose, and Team B in, say, Ukraine. But when you take that and extend it to include a team in China, a team in Japan, a team in North Carolina, and so on, things start to get really tricky. I think 2 time-zones is fairly manageable. More than that is, in my experience, pretty damn challenging.